U.S. targets trade buildup in Latin America

Wednesday, May 22, 2013

Acting Commerce Secretary Rebecca Blank last week wrapped up a seven-day trip to Latin America to help drum up business for U.S. companies engaged in infrastructure planning and construction with a speech at the American Chamber of Commerce Panama where she highlighted the importance of trade relations with the Central American nation.
Twenty companies specializing in project management, transportation, energy and water resource infrastructure accompanied Blank on her trade mission to Sao Paulo, Brazil; Bogota, Colombia; and Panama City. The governments of those countries have outlined ambitious infrastructure development plans. The trip was designed to help the companies understand the market and make connections with public and private sector officials that can lead to business opportunities.
Trade missions are a common practice for the Commerce Department, but take on added importance as the Obama administration tries to hit its National Export Initiative target of doubling exports in five years by 2015.
Blank highlighted the free trade agreements recently concluded with Panama and Colombia. The delegation was in Colombia on the one-year anniversary of the implementation of the U.S.-Colombia Free Trade Agreement.
In 2007, Brazil launched the Growth Acceleration Program by investing $306 billion through 2010 to address infrastructure issues and prepare for the upcoming 2014 World Cup and 2016 Olympic games. In March 2012, Brazil began the second phase of the program by committing $582 billion through 2014 for transportation, energy, port and telecommunications infrastructure.

Blank

In Brazil, Blank visited aircraft manufacturer Embraer, which has invested in several U.S. facilities, employs more than 1,000 people in the United States and uses many American suppliers. She also met with Brazil's logistics agency, EPL; the Federation of Industries in Sao Paolo; the Sao Paolo Transportation Agency; the Ministry of Development, Industry and Foreign Trade; the Secretary of Commerce and Service; BNDES, the Brazilian Development Bank; Sao Paulo State Airports Department; and the Ministry of Cities.
Colombia has also made infrastructure development a priority and earmarked $26 billion over the next four years for road projects. Ongoing and future modernization of airports, sea and river ports and rail lines are expected to continue, the Commerce Department said. Since the free trade agreement took effect in May 2012, U.S. goods exports to Colombia have increased 19 percent compared to the same period the previous year. Eighty percent of U.S. consumer and industrial goods are now duty-free in Colombia and within five years 95 percent of goods will enjoy duty-free status.
The visit to Colombia included meetings with the ministries of foreign trade, transportation, civil aviation, mines and energy, as well as the National Infrastructure Agency.
"Tractors from a company in Texas now enter Colombia duty free, a bath and body products maker in Florida made her first export sale to Colombia in January, and Colombians can now more easily buy an iconic American product – a Harley Davidson motorcycle – because the 15 percent tariff has been dropped," Blank said in Colombia at an event commemorating the anniversary of the FTA, according to a copy of her speech.
"At the same time, Colombian exports to the U.S. remain strong and Colombia continues to experience a significant trade surplus with the United States, its largest trading partner. Under this new agreement, over 600 Colombian companies have exported to the U.S. for the first time. And Colombian experts have estimated that this agreement could add hundreds of thousands of jobs over the next few years – lifting more families into Colombia’s middle class, which has doubled in the past 10 years.This new agreement is also helping break down old assumptions about Colombia. Not everyone knows – as you and I do – that dramatic progress has occurred here over the past decade to make Colombia a safer and more secure place to travel and do business.
"But the word is getting out. We’re receiving more and more phone calls at the Department of Commerce from companies asking about the business climate here."
Panama is in the midst of one of the world's largest infrastructure projects - the $5.25 billion expansion of the Panama Canal with a second set of locks that can accommodate larger ships as well as excavation of the ocean entrances and other improvements to the channel. Panama also continues to expand its ports on both the Atlantic and Pacific coasts as well as develop logistics parks. Overall, it plans to invest about $15 billion in the next several years for mass transit, airport expansion, highways and roads, water supply and sanitation projects.
In Panama, Blank met with President Ricardo Martinelli; Panama Canal Administrator Jorge Luis Quijano; Roberto Roy, president of the Panama Canal Board and the Panama City Subway to discuss the Canal expansion project and the the Panama City Metro Rail Project; as well as representatives from the Port of Balboa and Tocumen International Airport.
Blank's speech at the American Chamber highlighted that Panama's economy has grown by double digits in the past two years and is a critical market for U.S. exporters. Between 2011 and 2012, the total volume of trade between the United States and Panama grew by 21 percent, reaching $10.5 billion. The free trade agreement made more than 87 percent of U.S. exports duty free in Panama. Prior to the trade pact, Panama's average tariff rate on U.S. industrial goods was more than 7 percent, with some tariffs reaching 81 percent.
U.S. exports to Panama have increased 20 percent, while trade in the opposite direction has grown 34 percent since the FTA took effect Oct. 31, 2012 versus the comparable period a year earlier.
"The new agreement is reducing red tape and other barriers to trade – particularly important for small businesses in the United States. It is also fostering an environment that encourages greater flows of business investment, and it is strengthening our joint commitments in areas such as intellectual property protection," Blank said in her remarks to the American Chamber of Commerce.
President Obama has nominated political supporter and Chicago businesswoman Penny Pritzger to be commerce secretary. The Senate Commerce, Science and Transportation Committee is scheduled to hold a confirmation hearing for her on Thursday. - Eric Kulisch